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5.
"the aggregate of actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition" (Bourdieu, 1983)1. Stock2. Positive payoff3. Accumulation and depreciation4. Distinguishable: not different from human capital Civic Capital as the missing link 07/12/2011 5

7.
“Social capital is a property of large groups, even nations (not individual), similar to Machiavelli’s civic virtue”1. Stock: no separation input/ouputs2. Positive payoff3. Accumulation and depreciation: unclear process of inv./disinv.4. Distinguishable Civic Capital as the missing link 07/12/2011 7

8.
“those persistent and shared beliefs and values that help a group overcome the free rider problem in the pursuit of socially valuable activities” VALUES BELIEFS Civic Capital as the missing link 07/12/2011 8

9.
“those persistent and shared beliefs and values that help a group overcome the free rider problem in the pursuit of socially valuable activities”1. Stock2. Positive payoff3. Accumulation and depreciation4. Distinguishable Civic Capital as the missing link 07/12/2011 9

13.
 CC is the set of virtues learnt at school Substitution effect of CC with regulation in dealing with negative externalities (CC Need of regulation ) Payoff for the whole society Need for public financing to education Doubt: different styles of education can have different returns in term of CC Civic Capital as the missing link 07/12/2011 13

14.
 People adapt their norms and beliefs in response to social pressure of the community they live in Different effects of social pressure on beliefs and values:  BELIEFS  Always affected by socialization  Asymmetry between accumulation/deterioration  VALUES  Normally embedded in preferences (not modifiable)  but Conformism desire can lead to changes Civic Capital as the missing link 07/12/2011 14

15.
 Religion as further potential source of socialization Stronger moral values and higher trust of people raised religiously Difference between more and less hierarchical religions  Decentralization in Protestantism  Hierarchy in Catholicism Religious people more intolerant of diversity Civic Capital as the missing link 07/12/2011 15

27.
VALUES BELIEFS SURVEYS EXPERIMENTSN= participantsS = $ given to each participantNxS = total endowment = percentage of S returned to administrator by participant i = = effective percentage of NxS received by the administrator = pre-determined threshold of overall endowment whose reaching implies a social benefit, for each participant, higher than S If more than N participants free-ride, everyone loses; is an indicator of civic capital in a community Civic Capital as the missing link 07/12/2011 27

34.
VALUES BELIEFS SURVEYS EXPERIMENTS Crucial role of WORDING  Risk of endogeneity in the model No mapping of results in a probabilistic form (as in exp.) Individual preferences (such as betrayal aversion) may be included in answers collected.  Endogeneity problem: values and beliefs might affect c.c. through preferences Civic Capital as the missing link 07/12/2011 34

35.
VALUES BELIEFS SURVEYS EXPERIMENTSE = € owned by AS = € sent to B multiplier applied to S (generally, ) = The fraction of initial endowment given to the receiver in stage 1 (behavioral measure of trust)Fraction x of = sum returned to the sender, in stage 2 (measure of trustworthiness and intensity of trust) Civic Capital as the missing link 07/12/2011 35

36.
 Once social capital is defined as CC, it can be measured Measures of the diffusion of civicness and morality norms Measures of beliefs that help characterize the stock of civic capital COHERENCE WITH SOLOW’S REQUIREMENTS However  Need to select the right indicators;  Interpretational biases;  Cross-country comparability (high variability). Civic Capital as the missing link 07/12/2011 36

37.
 They represent measures of outcomes (input is CC) In general, they are difficult to interpret because of contamination (ex: institutional effect) Relationship input/output should not be affected by other factors, otherwise endogeneity  Blood donations  Electoral participation  Parking violation by UN diplomats Civic Capital as the missing link 07/12/2011 37

38.
 No economic payoff; No legal obligation Voter turnout = cost to sustain for producing the public good In some Italian regions, civic capital is higher Positive correlation of BD and EP, but far from perfect Civic Capital as the missing link 07/12/2011 38

40.
 Un diplomats are the statistical units PV not punished until 2002 in Manhattan = no legal enforcement So, the only reason why one should violate parking rules is related to cultural norms Civic Capital as the missing link 07/12/2011 40

50.
COLLAPSE OF ROMAN SACRED EMPIRE(beginning of 2ND millennium) Differences between North & South of Italy:  South: Efficient Norman Monarchy  North: political vacuum, so birth of cooperative institutions (COMMUNES) cooperation for production of the public good Putnam contingencies (1993): historical episodes justify differences between North & South GSZ (2008): comparison WITHIN NORTH, not just between N&S Civic Capital as the missing link 07/12/2011 50

52.
COLLAPSE OF ROMAN SACRED EMPIRE Analysis within the North: Not all cities became indipendent: some quickly lost it, some loyal to the Emperor/Feudal Lord USE 2 CONTROL VARIABLES:  City seat of a Bishop (facilitate coordination)  Founded by Etruscans or not (proxy of defense capability) Civic Capital as the missing link 07/12/2011 52

54.
 PRO: truly exogenous and randomized treatment CON: period of time CONDITIONAL CASH TRANSFER PROGRAM, COLUMBIA: participation to meetings based on cooperation and mutual trust topics, that can foster civic capital IF lessons learned are implemented in real life ATTANASIO (2009): PUBLIC GOOD GAME between a 2y CCT village and a non-CCT village BUT: not random selection of villages and unclear if difference is long lasting Civic Capital as the missing link 07/12/2011 54

56.
 Standard economic models can explain only half of the difference in economic performance (level of GDP per capita) between countries. Civic capital could be the MISSING FACTOR to explain the residual differences Challenge: find convincing sources of exogenous variation to overcome endogeneity emerging when:  CC reflects also the working of institutions  CC is correlated with unobserved factors affecting also performance  CC is partially reverse-caused by current economic forces Civic Capital as the missing link 07/12/2011 56

57.
 The narrower definition proposed can make easier to identify CC within economic performance (and as one of its determinants) Problem: it’s plausible to expect countries with higher CC (strong values, high trust) chooses institution that supports these values. Need of appropriate instruments to isolate the combined effect of CC and institutions on economic performance  2 main approaches in literature: 1. Links between past political institution and current cultural traits 2. Movers approach and the idea of “cultural portability” Civic Capital as the missing link 07/12/2011 57

59.
 Some examples:  Literacy rates in XIXth and indicator of political institution from 1600 to 1850 to explain current difference in CC endowment across Europe (Tabellini, 2009)  Past history of communal independence to explain difference in CC endowment across cities of northern Italy (GSZ, 2008) Major shortcoming  Current differences in culture across regions could capture differences in the actual performance of institution  The historical episode could have fostered accumulation of other forms of capital that still have an influence on economic performance (i.e. arts)  Need to obtain direct measures to control for them Civic Capital as the missing link 07/12/2011 59

60.
 Fundamental intuition  Norms and beliefs tend to move when people migrates  Institutions are not portable so CC embedded in the migrant is due only to norms and beliefs (not to institutions) then it’s possible to separate the effect on outcome of institutions from the one of CC Civic Capital as the missing link 07/12/2011 60

61.
 An example: Italian movers within Italy (GSZ, 2004)  Test effect of CC on financial developement  Controls for the province of birth to identify movers  Dummies for the province of living to control for actual performance of institutions  civic capitalaffected by cultural traits and not by institutions Results  civic capital in the province of birth affect use and availability of financial contracts (=trust) in the living province Civic Capital as the missing link 07/12/2011 61

62.
 GDP per capita and time-variation in trust (Algan and Cahuc, 2008)  Use of time variation in trust to eliminate institutions’ endogeneity CorrelationY = income per capita (institutional shocks)S = trust (WVS)X = vector of controlFc = country fixed effect of time-invariant institutions that make productivity changeFt = time fixed effect of factor endowment and time varying productivityv = error term Civic Capital as the missing link 07/12/2011 62

63.
 Substitute Sct with that is trust of the previous generation No Correlation trust of previous generation affects trust of today generation (through inter-generational transmission) transmission took place when current GDP wasn’t yet produced so is orthogonal to the error because it does not include the effect of institutional shocks Endogeneity is removed Civic Capital as the missing link 07/12/2011 63

64.
 Algan and Cahuc (2008) found a positive/significant and quantifiable effect of civic capital on GDP per capita Figure 10 The effect on GDP per capita of a Swedish level of CC Civic Capital as the missing link 07/12/2011 64

66.
 Ambiguity in the definition of social capital has slowed down the development of literature on the topic Civic capital definition satisfies Solow’s criteria Civic capital clearly differentiates social capital from other kinds Civic is the missing factor of production which can help explain the residuals of Solow’s model Civic Capital as the missing link 07/12/2011 66

67.
 Current measures are not yet ready to be used in national accounting Trust is the most promising component of a measure of CC  Founded economically  Easy to measure  Correlated with variables of interests Clarify the determinants of persistence of CC  Avoid policies that undermine CC, with negative long term effects  Boost policies that foster the formation and preservation of CC Civic Capital as the missing link 07/12/2011 67